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To bring down the prices of natural gas, the Centre and the Kerala Government have been requested to exempt the Petronet LNG Terminal here from Customs duty and VAT.

A demand in this regard was made in an appeal adopted at a workshop – Mission LNG – led by Kerala Chamber of Commerce and Industry to discuss on the issues related to the utilisation of natural gas from the Kochi Petronet LNG terminal. The high cost of LNG was the most important prohibitive factor that stood in the way of buying and using the LNG by the consumer segments, the appeal said.

It was observed that the pricing structure of natural gas in the country is highly distorted in favour of the States that have proximity to gas fields. When the natural gas from the Bombay High is being sold on the GAIL’s HBJ pipeline for around $2.5 to $4.2 per MMBTU, the re-gasified LNG from import terminals at Dahej and Hazira is being sold for around $10 to $ 2 per MMBTU.

The price of gas from the newly commissioned terminals such as Kochi ranges from $19 to $24 per MMBTU. At this price range, no industry, either commercial or domestic, can afford to make use of the gas, it was pointed out. The meeting appealed the Kerala Government to urge the Centre to enforce a national-level pooled price for natural gas by combing all sources of production in the country and the imports as in the case of all other petroleum fuels.

As Kerala does not have gas fields, the State is eligible for a legitimate share of the domestically produced gas. With the commissioning of the Kochi LNG terminal, it is pointed out that the State should raise its claim for a due share of the domestic gas considering the federal set up of the country.

The meeting also noted that the delay in laying pipelines by GAIL for supply of natural gas has become a major hurdle in increasing the LNG terminal’s capacity utilisation and further expansion. The Kerala Government should take adequate steps to enable GAIL to complete the laying of the pipelines from the terminal to NTPC Kayamkulam, Mangalore and Palakkad.

The preparedness of KSEB, KSRTC and the present condition of the Kochi city gas distribution venture are at very low ebb. These departments should have been ready with their projects in line with the commencement of operations of the Kochi LNG terminal. They may be instructed to speed up their projects for gas utilisation. The Mission LNG’s next meeting will be held after three months to review the progress in the implementation of the follow-up activities.

Source-On Request